Great post and conversation over at Blood and Milk for those thinking about starting their own international development NGO: Can you share some of your experiences in which inexperienced nonprofits did more harm than good?
Philanthropic bloggers have been abuzz with Kjerstin Erickson’s decision to post the details a few weeks back about a funding crisis that could put her NGO, FORGE, out of business. After Sean Stannard-Stockton described this as an experiment in “radical transparency” on his Tactical Philanthropy blog, many folks have jumped to Kjerstin’s aid, with the agreement that all involved post their perspectives as FORGE, well, forges ahead.
This is a case study unfolding in real time. While Kjerstin’s move provides an unusual learning opportunity for those interested in nonprofit effectiveness and sustainability, it also offers a chance to reflect on the many “facets” of nonprofit transparency.
(1) During my time as funder, several organizations came to us in crisis, laid open their books and spoke plainly about the decisions and mistakes that got them there. In this respect, I don’t find the honesty with which Kjerstin is presenting her dilemma all that unusual.
Crisis can inspire transparency. It’s hard to get the injection of cash or technical assistance you need by trying to mask the fact that you need it.
Most of these organizations already had a relationship with us, and trusted us enough to discuss their problems openly. They were not going to tell just anybody about their state of affairs.
What is unusual is that FORGE is fairly well-established, yet Kjerstin is using online social networking tools to let everybody know about her plight. She has attracted great resources, partly due to the “buzz” created by her initial posts and her courageousness in being so open. But I suspect if it became standard practice for nonprofit leaders to post honest and detailed information about looming financial crises, the novelty would wear off - and subsequent leaders would have a hard time getting the same sort of attention. Which brings up the question - what kind of transparency are we after?
(2) The discussion in the blogosphere centers on the benefits of transparency for donors and, as a learning opportunity, other nonprofit leaders and allies. But nonprofits derive their legitimacy from the constituents and the communities they serve. Shouldn’t transparency also serve them? To what level?
And it’s a two-way street - if I were a prospective donor, I’m interested in what the refugees served by FORGE think (if they know the program is in jeopardy of closing and have some understanding of the decisions that led there yet still choose to participate in the program, that’s important to me). Caveat: I discount the information somewhat if FORGE is the source of the refugees’ voices, since those voices are being filtered through an interested party.
(3) Filters can degrade transparency. We’ve heard about FORGE’s history and decisions almost exclusively from Kjerstin, so we’re getting mainly one perspective (not sure that meets the definition of “radical transparency“). Does better transparency include accessibility to, and information directly from, all parts of the organization?
During my time in NC, the Golden LEAF foundation, funded from the proceeds of the tobacco settlement, held their grantmaking meetings in public (they may still). As a prospective grantee, you could attend and watch as your proposal was discussed and decided.
This example highlights different levels of transparency regarding board decisions: we can get a summary from the chief executive; have access to a copy of the minutes; or be able to listen to the board meeting itself. I probably learn the most if I listen, but can I really do this for each organization that interests me?
Filters might degrade transparency, but they can also make information useful.
(4) Do we want different levels of transparency for different phases of an organization’s evolution? A venture capitalist investing in an early-stage company, for example, may expect a seat on the board - not only for control, but to have the fullest possible information about internal operations. After the company goes public, however, the standards of transparency for new outside investors don’t presume such access.
This also brings up the question of size, both of potential investment and the organization itself. Are large-scale investors entitled to more information than small donors (they might reasonably expect a more direct relationship, but are they entitled to a different level of information?)?
How should our standards serve both the International Rescue Committee, which in 2006 served 15 million refugees in 25 countries with a budget close to $250 million, and FORGE, which serves refugees with a budget approaching $400,000 - and is there a way to design those standards so that the refugee programs for the two can easily be compared? I’d love to see an organizational prospectus that meets the informational needs of all interested parties: the government/IRS, institutional investors (i.e., foundations and high-wealth donors), everyday contributors, and constituents.
(5) I think it’s important to recognize that FORGE is practicing transparency from a relatively privileged position. As Kretzmann and McKnight - who pioneered the asset-based approach to community building - would point out, Kjerstin has a strong base of intellectual and social capital and access to a range of additional resources (evidenced by the amount of support she’s already attracted).
As an organization accrues an increasing amount of “assets” - not just financial, but intellectual, social, and reputational - the instinct is to become increasingly guarded, since more seems at risk. The counter-intuitive nature of Kjerstin’s move is one reason why it has elicited so much attention. I have experienced nonprofit leaders in marginalized communities, for example, who are brutally honest and open about most details of their organizations (mistakes included), but their transparency doesn’t get them much. Often such “assets” are used by those with potentially helpful resources as a proxy for effectiveness (or at least potential effectiveness), and those that seem lacking are too easily dismissed.
If funders are honest, we’ll admit that getting too full a story is sometimes a turn-off; we think it shows poor lack of judgment. Presentation is still important, even when being open.
(6) It’s easy to be glib about “weeding out” the sector, to say that some nonprofits need to close. FORGE’s dilemma demonstrates that the reality is complicated. Refugees would go unserved. (When I hear conference presenters say donors should throw their support behind a well-run homeless shelter that serves 20 people (and has no aspirations to serve more), and stay away from another that serves 200 but where the management is more suspect - that it should be allowed to fail - I always wonder what the 200 people suddenly out on the street would say.) This would occur due to what appears to be a well-intended error in judgment vs. a pattern of bad management.
Yes, some nonprofits should cease to exist, but I don’t trust that at this point, through whatever weeding out processes are occurring - given the fragmented and imperfect nature of the nonprofit capital market, the difficulty of assessing and articulating impact, and our personal biases and predilections - we’ll end up with the organizations providing the most effective services, or that those who might benefit most would get served. We ought to be careful what we wish for - and wish FORGE well.
During our seminar with Duncan Green and Lant Pritchett last Friday, we revisited the question of NGOs providing services that governments are expected to provide – thereby undermining the development of effective states. This is terrain I initially touched upon in reaction to the Foreign Policy article decrying NGOs as “the new colonialists.”
Lant used a metaphor of NGOs as scaffolding – a temporary structure to relieve an immediate burden of a developing community, as well as a resource to build the wall necessary to hold the burden over the long term. Problem is, often the wall never gets built, and after a while the scaffolding is dismantled and it’s on to the next project.
I cited examples in my initial post to highlight that this is not always the case. However, I do agree that NGOs can do a much better job of developing strategies – from the very beginning of a project – to ensure that their intention of transitioning a program or services to local government or authority comes to pass. There is a need to document and share learning about such efforts, and deepen our understanding about what makes them successes or failures.
Martha Chen of the Hauser Center, who coordinates WIEGO, also offered the example of Bangladesh, where NGOs – BRAC in particular – have essentially created and run an educational system in light of the government’s failure to provide this basic service. While the intent was to provide education until the government assumed responsibility, there seems to be no end in sight, even after close to 20 years. She raised the possibility of a hybrid, where the NGO takes over permanent authority and responsibility for what we generally consider a state-provided social service. Could this work? What would be the implications?
In Duncan’s thesis, a key element in the relationship between active citizens and effective states is taxation. As he notes in the book, “until governments depend on their publics for their wages, it will always be an uphill struggle to force them to listen.”
Aid distorts taxation. When a government receives 60% of its revenue from foreign aid (as, Duncan explained, Uganda did until recently), their leadership is going to spend far more time interacting with donors than their own citizens. Devising a way to provide aid that insists on creating indigenous capacity so that ultimately aid is unnecessary is a conundrum akin to devising a successful U.S. withdrawal from Iraq, with attendant political dynamics and risk to stability. Perhaps the first step – as in the much-debated military strategy - is making clear that an exit is going to happen, and sticking to it.
Today the Hauser Center hosted Duncan Green, head of research at Oxfam GB, to discuss his new book, From Poverty to Power. Lant Pritchett, professor of the practice of international development, offered a response.
Some quick reflections:
Duncan’s thesis is that development is best achieved through (1) active citizenship and (2) effective states. While instinctively we might place these two in opposition to each other, they can be compatible and complementary. To be successful in alleviating poverty, the two must combine to redistribute power within markets so that poor people benefit:
The impact of markets on poverty and inequality depends on whether poor people can exert influence over the way they operate.
Working from his thesis, Duncan offered the following pressing issues for NGOs (this is my interpretation):
Much food for thought. I was especially struck by the point that the aftermath of emergencies is an opportunity to advance social change. It rang true - the social and government structures are so often unsettled, and those in charge more willing to incorporate new ideas and policies, especially if such policies reduce the vulnerability that the crisis has brought into such relief. NGOs might make relatively easy changes to their approach and have great impact doing so.
I’m sorry we didn’t get to explore the question of accountability more deeply. How are NGOs less accountable than they purport?
What jumps out at you?
(I originally posted this on Tuesday 11/11/08 and it mysteriously disappeared, so I’m reposting. Unless there’s been foul play from a new philanthropist acolyte, I can only chalk it up to a site glitch. Apologies for the redundancy.)
It is a truth almost universally acknowledged, at least by NGO leaders and international development policy experts, that U.S. foreign assistance is badly in need of modernizing and restructuring. One reason is excessive fragmentation: aid is distributed by the federal government out of 20 different agencies and 50 different offices. As critics like to point out, this does not make for policy coherence.
There are myriad factors for this jumble, chief among them the steady disinvestment in USAID over the past two decades. But there’s another reason that deserves more attention, since it reflects a similar trend among major private foundations and donors: the desire to measure and demonstrate impact.
As three past administrators of USAID point out in a recent article in Foreign Affairs, the focus of many newer presidential initiatives or earmarks is narrowly defined on a particular issue, which is “politically appealing because they appear to have a direct, measurable impact on identifiable individuals.” Here’s the problem: “… such a concentration on the short-term delivery of goods and services comes at the expense of building sustainable institutions that promote long-term development.”
It’s not enough to make drugs available to treat AIDS in a developing country. To solve the problem requires a public infrastructure - education and training for clinicians, effective government agencies, appropriate public health education, sustained services - as well as a healthy civil society that will make the drugs less and less necessary by improving the overall health and stability of the affected community.
The current craze in philanthropy for assessing and quantifying impact presents a similar conundrum. Focusing too closely on individual trees - because it’s easier to count the leaves - makes one run the risk of missing the forest altogether. As Susan Berresford, former president of the Ford Foundation, remarked over a year ago, “Isn’t it possible that too much reliance on short-term plans can miniaturize ambition for justice and for progress on deeply entrenched problems such as racism, poverty and inequality?”
If the federal government were to develop a comprehensive U.S. development strategy, it could help - at least then the burden can shift to measuring progress on the broad aims of development in toto. As most community organizers will tell you, rights-based development requires sustained, comprehensive investments in people and communities, and processes for developing local capacity and reforming social structures are messy and non-linear. A commitment to improving human security - which a new Obama adminstration has put forward as an important element of its approach to U.S. global engagement - requires a willingness to accept that some crucial elements of progress might be unquantifiable. The political appeal of short-term results will have to give way to a more complicated, nuanced picture - and that would buck the prevailing winds in the sector.
